Don't Let the Education Rate Perish

By Gary Beach

Nov 08, 1998

The fall of 1995 was a heady season for the education technology movement.

Politicians from both sides of the aisle and the entire telecommunications industry worked feverishly to make a reality of a challenge issued that September by President Clinton: to link every classroom to the Internet by the Year 2000.

Congress, for its part, was making final revisions to what was to become the historic Telecommunications Reform Act of 1996. One of those revisions, a bipartisan proposal by Sen. Olympia Snowe (R-Maine) and Sen. Jay Rockefeller (D-W.Va.), would turn out to be the genesis of the Education Rate, or E-Rate program, for funding education technology.

Snowe and Rockefeller proposed this innovative idea: Expand the definition of telecommunications "universal service" to include every school and library in America. Before 1996, universal service was a mandate administered by the Federal Communications Commission to ensure affordable telecommunications service to the most rural parts of America.

The Snowe-Rockefeller amendment hit a responsive chord, and when the Telecommunications Reform Act was signed into law in February 1996, the extension of universal service to include schools and libraries was a prominent part of the act.

The annual $2.5 billion E-Rate was hailed as a way to prepare America's children for a digital 21st century. The FCC was given the task of working with the telecommunications industry to work out funding for the program. The FCC created the Schools and Library Corp. (SLC) as a nonprofit group that would administer the E-Rate program. But then a wave of mergers and acquisitions shook the telecommunications industry and the FCC. "Acquire or be acquired" was the order of the day. Forgotten were the "feel-good" aspects of E-Rate.

Its resources stretched by mergers and the loss of its chairman, Reed Hundt, to retirement, the FCC put the task of coming up with the details of E-Rate funding on the back burner. Meanwhile, the SLC was collecting and approving applications from 30,000 schools and libraries that wanted a piece of the $2.5 billion E-Rate fund.

Slowly a supply and demand storm started building over E-Rate. While the SLC was doing an admirable job creating demand from the school and library community for the funds, the FCC allowed its efforts to work out details on collecting funds from industry to languish. Yes, there were devils in those details. And soon there were also lots of telecommunications industry lobbyists. With no funding plan forthcoming from the FCC, lobbyists for the long-distance and local telephone companies descended on all 535 members of Congress. Some painted E-Rate as a partisan subsidy program. The Wall Street Journal disregarded the bipartisan roots of E-Rate, labeling it as the "Gore Tax." Telecommunications vendors, irate with the FCC's foot-dragging, decided to pass the costs along to their customers.

Under tremendous congressional pressure, the FCC finally laid out a funding plan for the program. Funds were to be nearly $1.2 billion less, or half of the $2.5 billion that was initially proposed and that the SLC wanted. Schools and libraries, the intended beneficiaries of E-Rate, started to lose patience and confidence that they would ever see a dime from the program.

So does E-Rate have a future, or is it just one more good intention that will die a painful death in Washington?

I, for one, see a future for E-Rate-a future that is possible if the following steps are taken: First, Vice President Al Gore needs to aggressively attack the perception that E-Rate is a "Gore Tax."

E-Rate has bipartisan roots, and the vice president needs to pressure Snowe and Rockefeller to share this message with their colleagues.

Second, Secretary of Commerce William Daley needs to convince the telecommunications industry that E-Rate is the most significant revenue-generating idea to come down the pike in a long time. The message needed to be conveyed is this: 58 percent of American homes are without computers. That means every child introduced to technology in the classroom for the first time is likely to go home and put pressure on the family to buy a computer and a modem. Ah, the potential revenues!

Third, the FCC must figure out a way for Internet service providers, computer manufacturers and network equipment manufacturers to pay into the E-Rate fund. It is not fair that the telecommunications providers bear the entire cost of the program.

The time to act is now.

Gary Beach is the founder of Tech Corps, the publisher of CIO Magazine and senior vice president of International Data Group. He can be reached at gary_beach@cio.com.

Democrats will vote on an appropriations package to reopen all the federal agencies shuttered during the partial shutdown, but the lack of wall funding will likely means the measure won't get a vote in the Senate.